Payback Period For Solar

The primary motivation for installing solar panels on a home or company is cost savings. So, it’s crucial to view solar as a long-term savings tool or investment. So, the solar payback period is the most appropriate criterion for comparing solar quotations as investments (among many others).

What Is The Payback Period For Solar Power?

The solar payback period is an estimate of how long it will take for you to “break-even” on your investment in solar energy, just as it would be for any other type of investment. The payback period for solar is determined by the total cost of the installation (after rebates and tax credits have been subtracted) and the money saved on electricity bills over time.

If your solar panel system has a payback period of eight years, for instance, it implies you will recoup your initial investment through reduced electricity costs in that time frame. But, solar panels can endure for 25 to 30 years, so after the eighth year, the savings from solar become substantial, typically reaching into the tens of thousands of dollars.

Note: When you buy a system, how long until you break even?

The article discusses the solar payback period, assuming an initial outlay of cash. However, there are other options for financing solar energy systems, including solar loans and solar leases/PPAs. Instead of paying for solar all at once, you can spread out your payments over time with a loan, lease, or PPA. Paying for solar with a loan or lease will reduce your long-term savings, but if your solar payments are lower than your existing electricity costs, you’ll see a return on your investment (ROI) from day one.

How Long Will It Take for Your Solar Panels to Pay for Themselves?

The payback period for solar panels depends on two variables: the initial cost of solar (after rebates and discounts) and the yearly savings on your electricity bill.

Cost Breakdown For Going Solar

Finding out how much solar will cost you is the first step in determining your payback period. The final price will be established by the scale of your system and the components you choose.

Whether or not you will receive solar incentives, tax credits, and rebates in the first year or spread out over 10 years is a significant consideration for the payback term calculation.

Annual Savings With Solar Energy

The annual savings you can expect from going solar is the second factor to consider when figuring up your solar payback period. The primary factors influencing this figure are your electricity consumption, the output of your solar panels, and your electricity costs.

Your Solar Investment Payback Timeframe

Here is a detailed guide on how to figure out the return on investment for solar panels on your own. If you’d rather not do the math yourself (we don’t blame you), the EnergySage Solar Calculator can figure out how long it will take for your solar panels to pay for themselves.

Step 1: Find the total price tag.
The total price of your solar panel setup should be reduced by the sum of the upfront incentives and rebates.

Step 2: Estimate your yearly cost-cutting
Add up the money you’ll save each year by not having to pay for electricity and any other annual incentives you receive, like SRECs or PBIs.

Step 3: Multiply the total expenses by the yearly profit.
The answer will tell you how long it will take to break even. After you’ve reached your break-even threshold, your monthly savings are pure profit.

Comparison Purchasing Reduces Solar Panel Payback Time

A lower payback period than the average can be found by comparing quotations from multiple solar installations. Consumers who shop around for solar panels in 2020 may expect a return on their investment in roughly 8 years, according to the data, and free electricity throughout the lifetime of their systems (which can last between 25 and 35 years).


The payback period for solar power systems can vary depending on a range of factors, including the initial cost of the installation, the household’s energy consumption, the location of the system, and the local policies and incentives. Generally speaking, the payback period for a residential solar power system can be anywhere from 5 to 15 years, and sometimes even shorter if the system is eligible for tax credits or rebates.

While the initial investment can be significant, going solar can provide significant long-term benefits, including lower energy bills, a reduced carbon footprint, and increased home value. Therefore, it is important to carefully evaluate the costs and benefits of a solar power system before making a decision and to consult with a qualified installer to determine the most appropriate solution for your specific needs and circumstances.

At Sun Services USA, we take care of every step of the process, from the initial site survey through the engineering design, utility applications, and installation! Even if there are no major developments, we will continue to check in with you once a week to ensure that you are kept in the loop. Please do not hesitate to get in touch with our staff if you have any questions or require assistance.